UPDATE 3-First Solar plants win U.S. loan guarantees

Thu Jun 30, 2011 12:08pm EDT

* Three California projects win Energy Dept. loan backing

* Plants will total 1,330 MW when completed

* Shares rise 7 percent (Adds analyst comment, background, updates share price)

NEW YORK/WASHINGTON, June 30 (Reuters) - The U.S. Department of Energy awarded First Solar (FSLR.O) conditional loan guarantees worth $4.5 billion for three of its biggest power plants in California, lifting the company's shares 7 percent.

Investors had been anxiously awaiting news on the loan guarantees, which will sharply lower the cost of building the plants. The facilities will have a total capacity of about 1,330 megawatts, 30 percent more than a large nuclear power reactor.

First Solar, which makes the lowest-cost photovoltaic panels in the industry, has entered the power plant building business in recent years as a means to help create a pipeline of demand for its products.

The loan guarantees, announced on Thursday, offer protection for investors who lend funds to the company to build the projects, and will help the company find buyers for plants.

"They still have to get some of the equity commitments for some of the plants," said Ardour Capital analyst Adam Krop. "But we've seen a lot of interest for these projects. I don't think that will be problem."

The company received a conditional commitment for a U.S. loan guarantee of $967 million for its 290-MW Agua Caliente plant in January. It announced in December that it would sell that plant to power company NRG Energy Inc (NRG.N) for up to $800 million.

First Solar, the largest solar company in the world by market value, has a pipeline of power plant projects totaling 2,400 MW. It expects to have module production capacity of 2,820 MW annually by the end of 2012.

LOAN EXPIRATION

The Energy Department program that grants renewable power projects the guarantees on loans to secure financing will expire later this year, removing a key support for an industry that depends on subsidies in most locations to compete against fossil fuels.

The Energy Department said the conditional loan guarantees for First Solar include $680 million for the 230-MW Antelope Valley Solar Ranch project, $1.88 billion for the 550-MW Desert Sunlight project, and $1.93 billion for the 550-MW Topaz Solar project.

The Antelope Valley plant has received all its permits and construction is expected to begin in July. The Topaz and Desert Sunlight plants are expected to receive their permits next month.

The company expects the projects to create a combined 1,400 jobs in California during peak construction.

Declining solar power subsidies in key European markets have trimmed demand there, leading to a glut of supply that has pushed solar panel prices down more than 10 percent this year, pressuring solar companies' share prices.

Short sellers piled into First Solar stock in recent weeks, betting it would sink, and represented more than 39 percent of the company's free float shares. That helped pressure the stock down more than 35 percent from a February high of $175.

First Solar shares were up 7 percent to $138.43 in midday trading on the Nasdaq. (Reporting by Matt Daily in New York and Tom Doggett in Washington; Editing by Lisa Von Ahn, Dave Zimmerman and John Wallace)

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